Chronicle of the Conspiracy
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Saturday, May 21, 2005

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2. Op-Ed columnist Paul Krugman has the disturbing habit of shaping,
slicing and selectively citing numbers in a fashion that pleases his acolytes
but leaves him open to substantive assaults. Maureen Dowd was still writing
that Alberto R. Gonzales "called the Geneva Conventions 'quaint' " nearly two
months after a correction in the news pages noted that Gonzales had
specifically applied the term to Geneva provisions about commissary
privileges, athletic uniforms and scientific instruments. Before his
retirement in January, William Safire vexed me with his chronic assertion of
clear links between Al Qaeda and Saddam Hussein, based on evidence only he
seemed to possess.

No one deserves the personal vituperation that regularly comes Dowd's way, and
some of Krugman's enemies are every bit as ideological (and consequently
unfair) as he is. But that doesn't mean that their boss, publisher Arthur O.
Sulzberger Jr., shouldn't hold his columnists to higher standards.

I didn't give Krugman, Dowd or Safire the chance to respond before writing the
last two paragraphs. I decided to impersonate an opinion columnist.

Okrent blames everyone but himself here. The top dog he blames very
delicately, with a double negative -- Arthur O. Sulzberger Jr.
shouldn't not do something about it. Readers -- the people he's supposed to
represent -- he's harder on. He calls readers like me "Krugman's enemies," and
says we are "ideological" -- the very same term Krugman himself uses to
describe us. But what's the difference for these purposes if we disagree with
Krugman's politics or not? We're the ones who relentlessly drew Okrent's
attention to Krugman's "shaping, slicing and selectively citing numbers." It's
Okrent who failed over and over to get Krugman to correct those numbers, or, in
most cases, failed to get Krugman's direct boss Gail Collins to even
return calls. So Okrent lashes out.
He has a habit of doing
that.

So ends Okrent's 18 months of shame. Good riddance.

Thanks to reader Jill Olson for the link.

Update [5/22/2005]... A further thought. There's a cover-up going on here. Okrent queues up this topic as one of "13 Things I Meant to Write About but Never Did," but the reality is that he did write about this very thing in his March 28, 2004 column concerning the Times' columnist corrections policy. By failing to mention that, Okrent is covering up the fact that the policy he helped put in place has failed -- because he was impotent to enforce it.

If he were Obi wan-Kenobi in this particular galaxy, what would he do to
extricate the US from this mess? "No more budget deficits," he says. "We
should be running surpluses." Tax increases: "We should be getting 28% of GDP
[gross domestic product] in revenue. We are only collecting 17%."

FURTHER PROOF THAT THE HAYEK RELIGION IS BETTER THAN THE KEYNES RELIGION
The Cafe Hayek blog questions the logic in
Paul Krugman's
column today, which spins the conspiracy theory that Chinese lending
to US federal deficits is fueling a US housing bubble.

Suppose that, in the fantasy world in which Uncle Sam is fiscally
responsible, the Chinese spend all of their dollars on U.S. goods and services
– rather, than, say lending these dollars to U.S. banks or investing them in
U.S. housing-development projects.

Would interest rates be higher than they are today? Would housing prices be
lower than they are today? One part of Krugman's argument says 'yes.' His
claim that foreigners' purchases of U.S. government debt keep interest rates
lower than they would be if Uncle Sam balanced its budget is key to his
argument that foreign purchases of U.S. government debt are fueling a housing
bubble in America. But Krugman's full argument contradicts itself.

According to Krugman, the current budget deficits would raise interest rates
significantly were it not for the happy fact that foreigners lend so willingly
to Uncle Sam. So if Uncle Sam stops running budget deficits, Krugman’s
argument suggests that interest rates in the U.S. will remain low -- hence
keeping mortgage-financing costs low. Insofar as low interest rates are
fueling the housing boom, such a boom – on Krugman’s own logic – would be
fueled by fiscal responsibility on the part of Uncle Sam just as it is now
being fueled by foreigners’ willingness to by U.S. Treasury notes.

THE SOUNDS OF SILENCE
If a Democrat falls in the forest and the liberal media doesn't report it,
does it make a noise? Apparently that's the theory with Florida congressman Robert Wexler, who broke ranks with fellow Democrats Monday by offering a plan to
reform Social Security. Amazing! After months of party-line stonewalling, a
gesture of bipartisanship. And yet there hasn't been one solitary word about it in the
"paper of record," the New
York Times.

This is big news. So why the silent treatment from the liberal media?

Could be the liberal establishment is hoping that if they pretend that
Wexler's initiative doesn't exist, it will just go away -- and the Democrats can
get back to business as usual by boycotting President Bush's efforts at reform?
Or it could be that Wexler himself is seen as a bit of a liability at the moment
-- it having recently been revealed that he
has been among biggest recipients in the House of Representatives of
lobbyist-paid travel (the same thing Democrats are persecuting Tom DeLay for doing less of).

More likely, the reason is that the substance of Wexler's Social Security
reform proposal itself is an embarrassment to the Democratic party. You see,
Wexler's proposal consists of just one element: raise taxes -- 6% on anyone
making more than $90,000 a year. Yes, normally Democrats aren't embarrassed
about wanting to raise taxes. But in the case of Social Security, higher taxes
have some special problems.

First, Social Security is already running a surplus, taking in more in taxes
each year than it will pay out in benefits (it will do so until 2017). Raising
taxes today will just make that surplus larger. That's a problem because that
surplus isn't being saved for the sake of the system's future needs. The
so-called Social Security Trust Fund uses the surplus to buy special-issue
Treasury bonds -- which is to say, it hands the surpluses over to the federal
government to spend.

The federal government is not itself doing any sort of savings in order to
retire those bonds when they come due. So when they inevitably come due decades
in the future, taxes will have to be raised again. That's right -- the
more taxes are raised now, the more they'll have to be raised again
in the future.

Second, even blithely assuming that today's tax revenues could somehow be
saved toward future Social Security benefit payments, is Social Security as we
know it really something we want to raise taxes for? Aren't there other
priorities? For instance, the Democrats have been fond of saying that Medicare
is a bigger fiscal crisis than Social Security -- and they're right about that.
And of course they have a long wish list of federal initiatives all requiring
higher taxes.

...why would we want to raise taxes on well-off workers to fund higher
benefits to well-off retirees?

But wait -- isn't Social Security supposed to be a program designed to keep
the elderly out of poverty? No: that's what the Democrats are always saying, but
the reality is that everyone, rich or poor, gets Social Security
benefits. Visualize this: at this very moment Warren Buffet receives Social
Security benefits.

Instead of raising taxes, President Bush has proposed the idea of
"progressive price indexing" of Social Security benefits. The idea is to cut
back the rate of scheduled benefit growth for the highest wage earners, while
increasing the growth of payable benefits for lowest wage earners. The
combination of the two goes a long way toward restoring fiscal balance to the
program, preserves and enhances the safety net for the neediest, and addresses
Boskin's question about taxing the well-off to provide benefits for the
well-off.

For all that, the Democrats are attacking the idea of progressive price
indexing as an attempt to slash benefits for the middle class. But that's simply
a lie. According to Social Security Administration models, for the middle 20% of
average lifetime wage earners -- surely that defines the "middle class" --
progressive price indexing would increase benefits payable in 2050 from
$1,208 (in 2005 dollars) to $1,380. And that doesn't even include the
additional increase in benefits that would accrue from investing in personal
accounts. And the benefit improvement is even greater for workers below the
middle class.

The Democrats are ignoring those figures. Instead, liberal think tanks (like
the Center for
Budget Policy and Priorities) and liberal pundits (like Paul
Krugman) are focusing on the purportedly middle class $60,000 wage earner,
whose benefits -- they claim -- would be lower under progressive price indexing.
The claims are false, because these opponents ignore the fact that, under
current law, benefits will automatically be slashed across-the-board after 2041
when the Social Security Trust Fund's assets are depleted.

And the Democrats' claims are false because $60,000 in Social Security wages
is anything but middle class. Remember, your wages used for calculating Social
Security benefits are an average of your 35 best years. If that average is
$60,000, chances are it included a number of years when your earnings were
considerably less. With that in mind it should be no surprise that,
according to the Social Security Administration actuaries, only 15% of
Social Security beneficiaries have $60,000 or more in average earnings. Yet
Democratic House minority leader Nancy Pelosicalls such people
"solidly middle class."

So what's up with the Democrats? When President Bush's plan for progressive
price indexing enhances benefits for the true middle class and below, and
moves Social Security a long way back toward solvency? Why do they want to tax
the well-off to fund benefits for the well-off?

Simple -- it has nothing to do with Social Security at all. They're against
Bush's idea simply because it's Bush's idea. And they're in favor of raising
taxes for the same reason Willie Sutton robbed banks -- because that's where the
money is.

Congressman Wexler had the courage to come out and say it. But if the liberal
media gets its way, you won't hear him.

... Newsweek has published an inflammatory story that has led to massive anti-American demonstrations in Afghanistan -- the first since the war -- protesting the seeming defilement of sacred texts. Sixteen people are dead because Newsweek got the story wrong, and the image of the United States is damaged in the Islamic world. And Newsweek refuses to hold anyone to account for this outrageous error, least of all its own senior management... But when the same reporter who wrote the current story filed the first disclosure of the Monica Lewinsky affair with his editors at Newsweek, the magazine piously refused to run the story.

In fact, in all the years of the Clinton presidency, I cannot recall a single instance of a similarly inaccurate high-profile story attacking the Democratic president.

LOW-CLASS ACT
Leftist economist Brad DeLong's web site has corrected
his outrageous misquotation of Warren Buffett and potential
plagiarism of a blogger from whom he lifted the misquotation, as delivered in a
presentation opposing Social Security reform to the Democratic Policy
Committee last week. Of course there's no indication anywhere that an error
had been made, or that a correction had been lodged upon the text displayed. I'd
say I'm disappointed in the integrity and candor of the opponents of reform, but
I'm not -- I knew all along they were this way.

...please be advised of the following: "This lecture will contain material
that some may consider to be complimentary toward the Bush administration. It
may, therefore, strike some listeners as unsettling, naïve, partisan,
propagandistic, chauvinistic, muddle-headed, or paid for by Karl Rove."

Let me deal with that last allegation right off the bat.

It is a matter of public record that I did, on January 10th, attend a meeting
at the White House at which several journalists and academics were invited to
discuss the course of our Middle Eastern policies over the next four years –
together with what the President should say in his upcoming inaugural address.

In the interests of full disclosure, I can confirm that I paid my own way down
and back, plus taxi and hotel accommodations. I did not attend under an alias.
I did, however, accept lunch with the group in the White House mess. And, at
the suggestion of Mr. Rove, I consumed a dessert listed on the menu as a
"chocolate freedom tart." Prior to the United Nations debate over the invasion
of Iraq, I understand, this dessert had a French name.

That, however, is the extent to which I have accepted compensation from the
White House.

I should say something, though, about how this invitation came about, because
it will lead into one of the major themes of today's lecture, which is that of
unexpectedness.

The story begins with the publication of my book, Surprise, Security, and the
American Experience, which appeared a year ago last March.

Late in June, I had a cryptic e-mail from a former student, now working in the
White House speech-writing shop: "the boss has read your book, and has told
all of us to read it."

I wasn't quite sure which boss he meant, but soon there was a call from Condi
Rice which cleared things up: "The President has read your book, and has told
all of us to read it. Could you come down and brief the National Security
Council staff?"

I of course said yes, but then started quickly flipping through the book to
review what I'd actually said about the President and his policies. Here are
some sample quotes:

I said that he had "failed miserably" in getting United Nations support for
the invasion of Iraq.

I said that his solutions to complex problems tended to be "breathtakingly
simple."

I said that the phrase "axis of evil" originated "in overzealous speechwriting
rather than careful thought."

I said that the failure to find weapons of mass destruction in Iraq had
"diminished, in advance, the credibility of whatever future intelligence
claims Bush and Blair might make."

I said that the so-called "coalition of the willing" there had been "more of a
joke than a reality."

I said that, "within a little more than a year and a half, the United States
had exchanged its long-established reputation as the principal stabilizer of
the international system for one as its chief destabilizer."

And I said that although great grand strategists know the uses of "shock and
awe," they also know when to stop. Here I cited the example of Otto von
Bismarck, who had shattered the post-1815 European state system in order to
make possible the unification of Germany in 1871, but then had "replaced his
destabilizing strategy with a new one aimed at consolidation and reassurance –
at persuading his defeated enemies as well as nervous allies and alarmed
bystanders that they would be better off living within the new system he had
imposed on them than by continuing to fight or fear it."

So I was not too sure how all of this was going to go over at the White House.

I did indeed meet with Condi and the NSC staff in mid-July for a lively
discussion of points made in the book and possible future directions for the
administration's grand strategy.

At the end of it, she casually asked: "Could you spare a few minutes for the
President?"

I allowed as how maybe I could, and so she took me into the Oval Office where
the President and the Vice President were waiting.

I expected, at best, a handshake and photo op.

But the President said: "Sit down. Loved your book. Tell me more about
Bismarck."

There followed a twenty minute conversation with Bush asking all the
questions. After which we found, cooling their heels outside, Secretary of
Defense Rumsfeld, Under-Secretary of Defense Wolfowitz, and the Chairman of
the Joint Chiefs of Staff, General Myers. "This is Professor Gaddis," the
President said, waving the book at them. "I want you all to read his book."

Well, I don't know how you would have responded in such a situation, but I was
somewhat surprised.

It goes on, and gets even better. Check it out. Thanks to Irwin Chusid for the link.

...the New York Times is going to start charging $49.95 a year to read the
online edition of their paper. This reminded me of a recent section on open
source that I read in
The World is Flat, the new book on globalism by Thomas Friedman, the
New York Times columnist.

From page 102

But I believe in that all online newspapers should be free, and on
principle I refuse to pay for a subscription to the Wall Street Journal. I
have not read the paper copy of the New York Times regularly for two years.
I read it only online.

So this of course raises the question, will he stop reading his own
newspaper?

.. the Iraq war has, instead, demonstrated the limits of American power, and emboldened our potential enemies ... At this point, the echoes of Vietnam are unmistakable ... Meanwhile, America's strategic position is steadily deteriorating ... America has been taken hostage ... the American military isn't just bogged down in Iraq; it's deteriorating under the strain. We may already be in real danger ... something has to give. We either need a much bigger army - which means a draft - or we need to find a way out of Iraq ... [5/16/05]

Paul Krugman:

I do not think of myself as an all-purpose pundit. I remember once (during the air phase of the Gulf War) seeing John Kenneth Galbraith making pronouncements on TV about the military situation, and telling friends that if I ever start pontificating in public about a technical subject I don't understand, they should gag me. [4/1/99]

THE TIMES FORTIFIES ITSELF AGAINST BLOGGERS
According to a story in this morning's Wall Street Journal, the New York Times intends to begin charging an annual subscription fee of about $50 for web access to "columns by more than 20 writers from the Times and the International Herald Tribune, including columnists Maureen Dowd, Tom Friedman and Frank Rich." This will have the consequence (unintended?) of making it far more difficult for bloggers to dissect Times columns. Hey, Folks! I wonder how this will affect "Bobby" over at the online Krugman shrine? Will the suits from W. 43rd Street start cracking down on him after years of online content piracy?

FDR'S LEGACY
Social Security reform opponents are so fond of invoking the mystique
of its founder, FDR, in order to confer upon the program the inviolable
saintliness of FDR himself. But you don't often hear them talk about FDR's
Social Security bait-and-switch.
Here's Noel Sheppard:

"Roughly 32 months after enactment, and four years before the first
American is supposed to receive benefits, the creator of Social Security
proposed 'liberalizing' it by extending coverage to those not originally
included, starting payments earlier than agreed upon, and making distributions
larger than prescribed in the 1935 bill."

So now we're getting somewhere. Mr. Bush has put on the table personal
accounts to build wealth over time, plus a reduction in the growth of future
Social Security benefits for higher-income workers known as "progressive
indexing." Mr. Wexler says neither of those are needed as long as the
government is willing to raise taxes high enough. By all means let's have a
debate.

Indeed. Funny thing, though -- the New York Times hasn't run a news story on
Wexler's plan. Hasn't even mentioned it. Perhaps the Times thinks that if
a Democrat breaks ranks in the forest and there's nobody there to hear it, it
won't really make a sound.